World Bank predicts 2.7% global economic growth in 2017

Oil drilling platform in front of Sugarloaf Mountain Image copyright Getty Images

There will be only a moderate pick up in global economic growth during 2017, the World Bank has predicted.

Its Global Economic Prospects report is forecasting 2.7% growth compared with the 2.3% seen last year.

That slight strengthening will be driven mainly by improvements in emerging markets and developing economies, the Bank says.

But there is heightened uncertainty after the US Presidential election, according to the report.

The World Bank's new forecasts suggest we can expect the unconvincing global economic revival following the financial crisis to continue.

Last year's growth figure was described as a "post-crisis low", with "anaemic" levels of investment and a further weakening of global trade.

Growth acceleration

For emerging market and developing economies, the rise in interest rates in the US and the strengthening dollar also led to a "notable tightening of financing conditions" - which means credit that is either more expensive or harder to get.

But the Bank still expects growth to accelerate in these countries, partly due to higher commodity prices, such as oil and metals, which many of them export.

The Bank's economists also expect the slowdown in two large emerging economies, Brazil and Russia, to come to an end.

For the developed economies the Bank forecasts continued weak growth of around 1.8%. That would be slightly better than 2016, but still slow compared to the period before the crisis.

Uncertainty about future policies has increased following the British referendum on the European Union and, potentially especially significant for the global economy, Donald Trump's victory in the US Presidential election.

The report includes an analysis of why the US matters so much to the rest of the world in terms of extensive trade and financial links.

It notes that there is a great deal of uncertainty about just what policies Mr Trump's administration will pursue in office.

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And it says there is the potential for stronger US growth if Mr Trump implements proposals to cuts personal and business taxes and stimulates infrastructure investment.

The report also looks at the possible impact of more barriers to international trade. This is not just about Mr Trump, though he has said he would increase some tariffs on imports and has suggested some existing trade agreements could be scrapped.

Poverty impact

The Bank says that globally, new trade restrictions reached a post-financial crisis high last year, and warns that emerging and developing economies would be most affected by more barriers.

This could hit the economies of some of the worlds poorest country's hardest, the report warns, saying growth has been the main driver of poverty reduction for the last two decades.

It says that if there was a return to the growth rates seen before the 2008 crisis, then extreme poverty could reduce to just 4% by 2030.

However weak growth like seen in 2015 would only bring down such poverty to 9%.

Next week, the International Monetary Fund will issue its economic outlook for 2017.

But it's important not to compare its headline figures for global economic growth with the World Bank's.

There are two different methods of adding together individual country growth rates to a get a global number and these institutions choose to headline different ones, thought they do report both.

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